Upper crust: the POCKET SANDWICHES (and maybe croissants) saga (Part 2 of 2)
Originally posted 2011-07-18 13:32:48. Republished by Blog Post Promoter
I owe this essay to everyone who believed in creating a dream, and helped build his or her own company into the company we almost were. The following is truthful and factual, which makes it hard to dispute unless, alas, you possess, and are willing to spend, untold amounts of good money to destroy dreams and hard labor, credit, business, integrity and family, such as Nestlé did to me and my family.
Prior to July of 2003, V&V Enterprises, Inc., did business as Mauro Brand Products and been marketing and selling “pocket sandwiches” since coming under inspection by the USDA in 1991. Before coming under Federal Inspection with the USDA, we had marketed and sold our products as “pizza turnovers” since 1981. It was quite a traumatic change at that point, because the USDA did not have a category in which to classify our product. Their category was “Multi-Component Products”, and “Pocket Sandwiches” came under that category. We adjusted our customers to the name changes with quite a bit of explanation, but because we made such a well-accepted product, our customer base soon made the adjustment acceptable. We had slowly evolved into a food company which had enjoyed distribution of its’ Pocket Sandwiches in school food service from New York City to Los Angeles. Our years of financial struggle were over. Our commitment to children and to the disabled Americans, which we employed, and still do, was reaching the highest levels of fruition. Our commitment to those less fortunate was driving our goals. St. Jude Children’s Research Hospital became our ‘friend in need’, along with the ‘Make a Wish’ Foundation. Above and beyond our monetary contributions, Micaela, my wife of 33 years, formed a ‘club’ for making rosaries, and taking any and all donations to our beloved charities, so that more people would feel compelled to help those poor children with nowhere else to turn.
We started our company in a back room at Sorrento’s on Parkman Rd. in Warren, Ohio. Keeping both businesses under one roof was proving to be very difficult so we built a new facility right up the street so the business could grow and flourish. After a few years, our small building was virtually bursting at the seams and we needed to expand the ‘brick and mortar’ to allow for continued growth. With a ‘lease to own’ agreement, we completely renovated a former bowling alley to become a state of the art, USDA inspected food facility, which was eight times our former size, with extra acreage for future expansion. With bona fide contracts in hand, we ordered new manufacturing lines, which would easily triple our daily, single shift output. Everybody was our friend.
With multiple years of successive double-digit growth and profits, our internal team, and acquired minority business associates, felt that the timing was right for a Reverse Merger into an existing Shell; a ‘public offering’ of the company. Lawyers and professionals were hired to properly formulate a new company, which would embody all that we were and all that we could be, and the process was set into motion. As we were reaching the finish line of dreams that can come true, we received a simple letter from Nestle USA; Nestle Prepared Foods Group; Hand Held Products Division, Englewood, Colorado.
They demanded that we cease and desist our current path or they would sue for Trademark Infringement, Deceptive Trade Practices and Unfair Competition, among other things. We had been making ‘pizza pockets’ since 1991, showing them at trade shows, sometimes next to the ‘Hot Pockets’ brand with no exchange of concerns, but it was now time to get rid of their annoyance. They had told us that they had monitored us since 1998. We made a great product, which was in growing demand, and they needed to maintain market share. It was stated by NestlÃ©’s that we could not afford to defend ourselves and our only option would be to change our name and what we called our product.
This multi billion-dollar company was attacking our less than 1.4 million dollar company. We were making an impact. Making a good product, hard work and dedication had gotten the attention of the world’s largest food company. We thought it was funny. Still being somewhat naive, we didn’t notice that no one else was laughing.
Our team of underwriters, Pacific Coast Capital and Empire Group, advised that the project could not move forward until we secured a successful outcome on our behalf in the threatened litigation. Contracts were put on hold. Longtime customers dropped us because they didn’t believe we could withstand a legal battle with a company of that magnitude. Since we, as a family, used every penny we had at our disposal, we had only financed $1.6 million of the $2.4 million for the move and expansion. Our local bank, which had financed the initial capital requirements for our project to move forward was unsympathetic to our unforeseen plight. An anecdote from my deceased father: The only way you can pick up the phone and talk to a bank president and he knows you by voice is one of two ways; you are depositing a lot of money and they want to keep it coming in or you owe too much money and they are worried you can’t pay it back. I’ve been there, on both sides of this issue.
The lack of money got us into serious trouble. My son Luciano’s engagement dissolved for lack of money. The bank filed for foreclosure on our home. Luciano’s ex- fiancÃ© filed suit for her interest in the home they built. They also sent tow truck(s) over to our personal residence to pick up our, and son Giorgio’s vehicles. Our daughter Carlla left the company to seek alternate employment. We found it very difficult to cover checks issued for supplies and were forced to pay C.O.D. with many creditors. I was going to just bankrupt it all and go look for work, but after over 20 years of doing the right thing and leading a good and decent life, I said, “who’s wrong here?” I saw no valid reason to back down from this competitor, as nothing other than following the laws, rules, and regulations was what I was guilty of. Family members and friends helped us out financially because they believed in us, our integrity was our strength. Because we wouldn’t cower to their arrogance, NestlÃ©’s took us to Federal Court. They did this in Denver, probably because they thought it would be more inconvenient for us. NestlÃ© USA is headquartered in Cleveland.
The lawsuit by NestlÃ©’s against our company was hand delivered to me by a law enforcement officer on December 24, 2004.
And all of this, for what? Section 25 of “Defendants’ Unlawful Activities” states “investigation revealed Defendants’ apparent intent to expand substantially the scope of their operations, … beyond their previously limited market niche. ” How’s that for securing a monopoly and extinguishing a fire of hope?
We filed a counterclaim against NestlÃ©’s in 2005, and that is where their bullying was notched up higher. With several lucid communications from their outside counsel to our local counsel in Warren, Ohio, our counsel was intimidated into dismissing our counterclaim under threat of Sanctions under Rule 11.
NestlÃ©’s, because of the unlimited resources available to spend at will, conducted such a thorough investigation of myself and the company, that they scheduled a court appearance for me, in honor of my 50th birthday. Although this comment is satirical in nature, the facts represent what extent they will go to in order to accomplish intimidation.
We have always fought the good fight. NestlÃ© USA does not own any trademarks, the parent company, Societe Des Produits NestlÃ©, S.A. Switzerland does. And only the trademark owner can sue. But NestlÃ© S.A. left the details of business to NestlÃ© USA, and most of the trademarks in question expired over 12 years ago. An important event in their suit against us was their willing dismissal of all State Claims, due to the fact that all State Trademarks had expired and had not been renewed. In an additional instance, the United States Patent and Trademark office, for NestlÃ©’s failing to file the correct papers, canceled the main Hot Pockets logo trademark, which was the original basis of their suit against us. The trademark office gave them a lot of time to make corrections but they failed to respond. In January 2005 the trademark office lost their sense of humor and cancelled the main Hot Pockets trademark. There is a lot of arrogance conveyed by ignoring the USPTO. Afterwards, in court documents, they simply said that they allowed trademarks to lapse. Really?
They have stated that other national companies have cowered to the strength of NestlÃ©. They had identified Schwan’s Food Service, Pillsbury, White Castle and ConAgra. In total, I have documented 128 cases involving the word “Pocket” at the TTAB. There are 55 Opposition Proceedings initiated by Nestle or their Predecessor-in-Interest, Chef America, and so far there are 73 “Abandonment’s”, most likely caused by a Cease and Desist letter. They had stated that we can’t afford to stand our ground, which of course, will allow them to continue to be a trademark bully. They claim that the average person confuses our product with theirs. In a show of dominance, they paid for a consumer survey, which by all rights should lean in favor of the payer, and with a skewing of the results, afforded them a very slight margin of success. If I had the financial resources available, their survey could have been, and can be, shredded to an almost non-effective document. The USPTO had originally said, by way of an examining attorney, that there is nothing confusingly similar with the Trademark we applied for. We never tried to duplicate Hot Pockets. We made ours and they made theirs. Trademark law suggests that ‘pocket’ is a generic descriptor. Their suit claimed that we had done “irreparable” damage to them. They claim that we are ‘riding their coattails’. Based on these claims alone, there should be no automobile other than Ford.
When we made the right decision to fight this bullying by a large, foreign owned company, they quickly initiated settlement proceedings, which they thought was a benevolent action on their part. We had been financially devastated, in great debt, and struggling to keep utilities and taxes paid.
Conventional wisdom would say to take the small amount of money they offered and run. They had said that even if we won the case, there would be no money to offset our costs, business losses or personal grief. Take the pittance they offered, lose the word ‘pocket’ and change who we are. We were not going to do that willingly. The operative words were ‘even if we won’. There was the very slightest bit of concern in their demeanor. Knowing full well that based on the issues and accusations in their suit, an actual court case provided only marginal opportunity for success for them, they hired a high profile outside counsel to massage the accusations. Time and again the course of attack changed to eventually find a workable situation in which to maintain dominance in their stance. Just to show how kind-hearted they were, additional settlement offers were made from time to time as well. My question has always been: if we were wrong, and they thought we were wrong, why would they want to pay us? Their initial Cease and Desist letter dated June 18, 2004, stated that they wanted to expedite a settlement with us.
The ‘Colorado Litigation’ (U.S. District Court for the District of Colorado, Civil Action 04-MK-2533) entailed 9 trips to Denver for Hearings, Conferences and Trial. In continuing their path of ‘bullying’ tactics, they scheduled another court appearance for me on December 22, 2006, during the height of the Denver ‘Blizzard of 2006’, only to cancel due to weather, the day before. Holidays, family obligations and travel requirements have no input when it comes to devising ways to intimidate a person or company.
Due to our financial inability to establish a formidable defense team, NestlÃ©’s prosecution, much of which centered on shear intimidation tactics by NestlÃ©’s counsel, was able to persuade the Federal Court to grant an injunction against three of our 23 product names. Knowing full well that an infringement issue on the Trademark Application was a remote, at best, winnable argument, it was not addressed at trial. We were blind-sided by the Trial tactic of proving, successfully, that our “intent” was to take our products into mainstream distribution through the World Wide Web. Our website at the time www.pizzapocket.com was the issue presented as undisputable evidence of our course of intended action, which could possibly, effectively, infringe upon the ‘good name’ of Hot Pockets. The whole purpose of having a website is to promote your product to whoever would like to buy it. I don’t have an argument with that because that is the intended purpose of having a website. But NestlÃ©’s counsel focused on three product “names” we were promoting on the website and skewed the information to look as though we were intentionally trying to infringe, when of course by USDA regulation, we were not.
The trademark issue was not resolved in the Federal Civil Litigation proceedings.
In NestlÃ©’s attempt, which has been mostly successful, to eliminate competition, the primary reason for filing suit was not addressed in the Civil Litigation in Denver.
After Judge Krieger’s Final Ruling in the Colorado Litigation, April 5, 2007, our official trademark counsel, Michael S. Culver (Millen, White, Zelano and Branigan) advised that since there was no resolution to the Mark-At-Issue, our next action would come after 20 days when NestlÃ©’s counsel would be obligated to advise the USPTO of the Denver Litigation outcome. At that time NestlÃ©’s could attempt to force the cancellation of our Application.
More than a year went by, the time taken in which we renamed our 3 ‘infringing’ products (still mandated ‘pocket sandwiches’ under USDA regulation) before we heard anything concerning our Application. Our ‘product names’ were changed to be in compliance with the Injunction, new marketing strategies in place, and customers once again advised of changes that did not include the product quality or characterization. We had safely assumed NestlÃ©’s was no longer interested in our Application and we had intended to resume the approval process.
Needing to clear up old business, the Trademark Office had to ask NestlÃ©’s what their intentions were. With NestlÃ©’s knowing that they had ‘dropped the ball’ on this issue, they resumed their attack with allegations of ‘abandonment’. Yet another deposition was needed for them to formulate a new strategy to protect their position, one of which that found little support by the USPTO.
NestlÃ© took the issue before the Trademark Trial and Appeal Board to continue their menacing ways to completely destroy our business. The TTAB saw enough merit on our part to continue to hear arguments.
In the meantime, with a new company image, we launched a massive product introduction into the Metro New York area with all of our ‘non-infringing’ products.
We were contacted by a large, reputable marketing firm in New York City to introduce a competitive product to NestlÃ©’s Hot Pockets. This was in June of 2008, just about the time the USPTO was curious, by written notification, of what NestlÃ©’s intentions were, concerning the ‘Pocket Foods Corporation’ Trademark issue. Due to the shear number of people living in the New York region, NestlÃ©’s enjoyed large sales figures without the benefit of large scale advertising within that Market. This move on our part proved to be a financial disaster of unparalleled proportions. NestlÃ©’s saw our introduction into the marketplace and immediately began promoting their Hot Pockets in the same market, in the same grocer’s ads, at the same time we were being advertised. In complaining to the grocers, we were told that they promoted for whomever put up the most money, and that NestlÃ©’s was in fact going to spend whatever it took to quell our sales with massive new promotions of their own. The grocers were recipient to bonus revenues thanks to our efforts to introduce a competing product line, which was non-infringing. This is taking ‘bullying’ to an entirely new height. This is the ‘David vs. Goliath’ in its’ most devastating form.
Their court documents called us ‘losers’. We had endured the ‘legal system’ long enough and it sucks. We had pleaded with anybody who would listen that we were mandated to call our products pockets by the USDA. This category is active as I write this today. NestlÃ© has also instigated the removal of the word pocket from the ID Manual at the Trademark office. This behavior has got to stop. Either the USDA was wrong in creating the Multi-Component Category ‘pocket sandwiches’ and helped create this mess, or the Trademark Office has cowered to a foreign company dedicated to eradicate American business, or NestlÃ© is blatantly guilty of monopolizing an industry.
Although there were like competitors such as ConAgra that produced an identical ‘Hot Pockets’ knock off, very recently ConAgra sold off its pocket division to J&J Snack Foods in NJ. Con Agra was the largest producer of ‘private label’ brands for most retailers, including Walmart. With no private label being offered by Walmart any longer, NestlÃ©’s stands to garner a huge increase in sales. Walmart is the world’s largest retailer. When you look at the issue of ‘confusingly similar’, the picture paints a thousand words. We have side-by-side photos of NestlÃ©’s Hot Pockets products and ConAgra’s ‘knock off’ stuffed sandwich products. If the product names were obstructed from view, one would not be able to tell which one is which. With no Walmart sales for their ‘stuffed sandwich’ purchase, the transaction pretty much leaves NestlÃ©’s Hot Pockets in complete control.
And now to ‘frost the cake’ for NestlÃ©, they recently brought Ann Veneman, former Secretary of the United States Department of Agriculture on board with them. Hmmm.
This is the kind of rampant disregard for American business, and the efforts of people trying to build viable business in America, are facing every day.
I have written this with truth and all sincerity. It’s too amazing to be made up. The entirety of all documentation can be obtained at:
UPDATE: March 10, 2011
The USPTO has DISMISSED the Opposition by NestlÃ©’s. Carl thanks all who stood by him and his family. Now he can begin the journey of trying to rebuild the American dream. Hey, NestlÃ©’s, who’s the “loser” now?
On May 24, 2011, Nestle voided their option to Appeal the Decision by the TTAB.
On June 28, 2011, the above trademark was registered. Registration Number 3982946